When It Makes Sense to Work For Free

This is a terrible question, and it usually begets a terrible answer. It’s a question that motivational speakers use to encourage people to make sure they’re optimizing their ability to earn an income. There’s nothing wrong with that per se, but it leads to some poor conclusions.

For instance, if someone earns a salary that works out to $2,000 a week and works 40 hours a week, the immediate conclusion could be that this worker’s time is worth $50 an hour. It’s a simple way of looking at a financial equation and neglects to incorporate important aspects of compensation like benefits and job security, but it’s usually the baseline that employees use when trying to determine how much money their time is worth.

Calculations like these lead to bad conclusions. You might avoid certain tasks, like household cleaning, because the task isn’t worth your time and you could hire someone to do the same work for less money. Your hourly rate for work may be $50, but that doesn’t mean that all your time is worth the same amount.

In my first main job out of college, I was working for a nonprofit with a salary of about $2,700. It worked out to about $550 per week, or $11 an hour. But wait — I actually worked closer to 80 hours a week most of the year, so the value of my time, using this calculation, would have been $5.50 an hour. The minimum wage in New Jersey at the time was $5.15.

For an Associate Director of a far-reaching program with a lot of responsibility, that’s probably not a fair rate of compensation. But I believed in the organization’s mission — and prior to being an employee, I was an unpaid intern with the same organization, and I wouldn’t believe that the value of the value of my time was $0.

Unpaid internships are like slave labor. Even though there are strict rules that govern whether an unpaid internship is legal, there’s a fine line, and companies seem to have a lot of leeway. Unpaid internships are practically necessary in some fields, taking the place of entry-level jobs, and this is especially true in nonprofit.

(That’s why I’m in the process of establishing a small stipend at my undergraduate alma mater for students in the arts who need an internship to complete their degree. Not all students are able to spend a semester or summer working for free.)

But once you’re established in a field, there should be no reason you are expected to work for free.

This is true for employees. Business owners, on the other hand, have a different approach to compensation for time and effort.

After I started Consumerism Commentary, I began working really hard to build this website from the ground up. I usually worked about eight hours a day, writing, conducting research, building some of the technology, communicating with colleagues, and eventually dealing with advertising clients.

For a long time, there was no money involved. I was essentially working for free, but I was doing something I really enjoy: building a fantastic community of people interested in personal finance. It didn’t feel like work, even though I spent more time and effort on the project that I put into my day job.

I eventually realized that I was building something, something of value. And that helped me focus on growth and working hard even when I started to make some of those calculations. When advertising revenue from the website was approaching $2,000, I started to see major potential, but I was still concerned. Even working 40 hours a week to build the site (in addition to 40 hours at my day job), the work I was doing was “worth” only about $11 an hour.

But I was creating an asset. I was creating an asset that had an important feature: cash-flow. I was building something in my own name, something I could own. I was working for a what was effectively a small wage, but it had the potential of paying off for me in the long-run.

When you work for a small wage for an employer, the only way to use that to build something for the future is if the low-paying job helps you move forward in your career. There are no guarantees that will be the case. And there are no guarantees that spending a lot of time working for yourself will result in something of value, but chances seem to be better. You have more control over your destiny.

In the nonprofit world, privileged employees, those who retired from a lucrative career and don’t really need the income or those who come from wealthy families and are supported by their wealth instead of working, ruin the industry for everyone else. If nonprofits can keep finding people who don’t need money to work practically for free, those of us who want to work in that industry but need to make a living will never be able to find good work.

There’s a lot of correlation between nonprofit work and early work at a tech start-up. Usually, the company’s leader, with a vision, encourages people to take a chance on an emerging business, and those at the beginning of a budding company are highly motivated and generally don’t care too much about salary. Again, that’s really only possible with a good amount of privilege or a willingness to live in a slum.

But there’s a key difference. When you join a start-up at that point, there’s usually a promise of later compensation. Early employees are often given equity, which encourages workers to increase the value of their equity by doing fantastic work for making the business an early success. A bootstrapped company has not a lot of cash from profits to work with, so equity is a way to fairly compensate employees.

The picture changes abruptly when that start-up receives capital, whether from angel investors, venture capital firms, or an initial public offering on a stock exchange. That equity now has some real value, and the company now has cash. And when attitudes at that company don’t change inline with their multimillion dollar funding, it creates a significant conflict, especially when the company prefers to partner with individuals through good will rather than compensation.

Here’s when it makes sense to work for free, whether you’re an employee, self-employed, or a business owner.

Work for free as an intern if it’s the only option you have for getting into the field you want and it will lead directly to a paid job. It’s usually not the only option, and many times interns are turned away when their trial period is over. If there are so many people who want to work for a company or an industry that they’re able to take advantage of a large number of interns, the benefits of being in that field better be worthwhile, and they better be almost guaranteed to those who survive.

Work for free if you’re building your own asset that will provide you a good life in the future. There are no absolute guarantees, but this is the kind of free work that has the best chance of really paying off. Your working for free, but the work you’re doing directly benefits you.

Work for free if you want to help an emerging company whose mission you believe in. But don’t continue working for free once the company can afford to pay you for your work. And this doesn’t include working for free as an employee, where you should be compensated always, at least with equity.

If you are a freelancer or a consultant, you can build some relationships by working for free, but only if that leads to something of value once the work you do contributes to the company’s success.

Work for free if you can afford it and the work gives your life meaning. If you don’t need to earn money from how you spend the bulk of your time awake, then why bother pursuing compensation? If you can spend your time doing work for something meaningful and something that you enjoy while still meeting or exceeding all your financial goals, the added stress of a job — of working for money — seems unnecessary.

Have you ever worked for free? What did you see as the benefits? Do you regret it, or would you do it again? Has working for free ever paid off in the long run for you?

I have worked for free once as a volunteer. I believe that volunteering benefits not only the company you are volunteering for, but the people you help within that company such as clients, customers or more importantly as in my case, patients. The other person it benefits is yourself of course! Potential employers like to see that you did volunteer work and more often that not only adds to your credit and your probable job offer! I say this, because it worked for me. It was not the main reason I was offered not just one job, but many others, (as it was my experience and personality, of course!) but the employers did state each time how pleased or impressed they were to see that I not only DID volunteer, but added it on my resume for them to see. The other way it was a benefit was that I did get to help people! I made them feel better even if for that one day or I got to “turn their frowns upside down” and stop them from crying and then smile. I felt like I was contributing to society as a whole and I got to do this while I was pregnant with my second child. The place I volunteered at was a hospital and I was the main floor receptionist. I worked all the way until my delivery date and my employer also paid me with the “best” birthing room that they had and I had it all to myself! My empIoyer also came to visit me the day I gave birth and brought me chocolates, flowers and a gift from the gift shop and then stayed and talked with me for a while so I would not get bored while the baby slept (not that I was ever bored or short of visitors!) The other benefit was that it was during the time I was pregnant, and I only worked the hours that my first child was in school so that I could be home when she got home. That was another benefit, that the job did not take time away from anything or anyone. In short, it benefits a person to volunteer, as it helps to obtain employment and also gives one the gift of satisfaction in knowing the person you helped, was someone else, even if it was one person for one day. I myself was able to help many and enjoyed every minute of it. I highly recommend it!

I have worked for free once as a volunteer. I believe that volunteering benefits not only the company you are volunteering for, but the people you help within that company such as clients, customers or more importantly as in my case, patients. The other person it benefits is yourself of course! Potential employers like to see that you did volunteer work and more often that not only adds to your credit and your probable job offer! I say this, because it worked for me. It was not the main reason I was offered not just one job, but many others, (as it was my experience and personality, of course!) but the employers did state each time how pleased or impressed they were to see that I not only DID volunteer, but added it on my resume for them to see. The other way it was a benefit was that I did get to help people! I made them feel better even if for that one day or I got to “turn their frowns upside down” and stop them from crying and then smile. I felt like I was contributing to society as a whole and I got to do this while I was pregnant with my second child. The place I volunteered at was a hospital and I was the main floor receptionist. I worked all the way until my delivery date and my employer also paid me with the “best” birthing room that they had and I had it all to myself! My empIoyer also came to visit me the day I gave birth and brought me chocolates, flowers and a gift from the gift shop and then stayed and talked with me for a while so I would not get bored while the baby slept (not that I was ever bored or short of visitors!) The other benefit was that it was during the time I was pregnant, and I only worked the hours that my first child was in school so that I could be home when she got home. That was another benefit, that the job did not take time away from anything or anyone. In short, it benefits a person to volunteer, as it helps to obtain employment and also gives one the gift of satisfaction in knowing the person you helped, was someone else, even if it was one person for one day. I myself was able to help many and enjoyed every minute of it. I highly recommend it!

I worked another time for “free” in that I was not paid a salary but instead was paid by “a trade”. In my case, I worked as the receptionist/avgas attendee for a fixed-base operation at an airfield. The trade I received was “free” flight time so that I could learn how to fly and obtain my pilot’s license. I also was paid with supplies, like maps, my log book, etc.. This was an awesome summer job and I definately do not regret it and again I got to help people, not only my employer but customers as well who happened to become my fellow flight brothers!

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